DO CASE-MIX ADJUSTED NURSING-HOME REIMBURSEMENTS ACTUALLY REFLECT COSTS - MINNESOTA EXPERIENCE

Some states have adopted Medicaid reimbursement systems that pay nursi ng homes according to patient type. These case-mix adjusted reimbursem ents are intended in part to eliminate the incentive in prospective sy stems to exclude less profitable patients. This study estimates the ma rginal costs different patient types under Minnesota's case-mix system and compares them to their corresponding reimbursements. We find that estimated costs do not match reimbursement rates, again making some p atient types less profitable than others. Further, in confirmation of our estimates, we find that the percentage change in patient days betw een 1986 and 1990 is explained by our profitability estimates.